A new quarterly record for average daily volume of
Record quarterly revenues of
(12.6% on a constant currency basis)
Net income of
Adjusted EBITDA margin of 43.0%
Declared first quarterly cash dividend of
First Quarter Highlights
- A new quarterly record for average daily volume (“ADV”) of
$646.6 billion represented an increase of 21.0% - New quarterly records for ADV in numerous products, including U.S. Treasuries, TBA mortgage-backed securities, European interest rate swaps, U.S. high-grade credit, Chinese bonds and European ETFs
- During the quarter, U.S. high-grade credit volume accounted for 11.2% of total TRACE volume
- Double-digit increases in revenues from rates, credit, equities and money markets
- Net income of
$42.4 million and net income per diluted share of$0.19 - Adjusted EBITDA margin of 43.0% for the quarter
Gross revenue increased 10.2% (12.6% on a constant currency basis) to a record
Adjusted EBITDA increased 10.5% to
__________________________
1 The financial results presented herein are for
Select Financial Results (in $ |
Successor1 |
Predecessor1 |
% Change |
Constant |
||||
Gross revenue | $186.8 | $169.5 | 10.2% | 12.6% | ||||
Rates | $104.1 | $93.9 | 10.8% | 12.7% | ||||
Credit | $39.4 | $34.7 | 13.5% | 17.7% | ||||
Equities | $11.8 | $10.2 | 15.8% | 21.6% | ||||
Money Markets | $9.6 | $8.1 | 17.8% | 19.3% | ||||
Market Data | $16.9 | $15.6 | 8.7% | 9.4% | ||||
Other | $5.0 | $7.0 | (28.5%) | (28.4%) | ||||
Net income3 | $42.4 | $45.3 | (6.5%) | 3.4% | ||||
Diluted EPS3 | $0.19 | $0.21 | (10.7%) | (1.2%) | ||||
Adjusted EBITDA4 | $80.3 | $72.7 | 10.5% | 14.6% | ||||
Adjusted EBITDA margin4 | 43.0% | 42.9% | +14 bps | +79 bps | ||||
Adjusted Net Income4 | $52.2 | $46.7 | 11.9% | 16.6% | ||||
Adjusted Diluted EPS4 | $0.23 | $0.22 | 6.9% | 11.4% |
1 The financial results presented are for Tradeweb Markets LLC and its subsidiaries, the predecessor of Tradeweb Markets Inc. For an explanation of the financial reporting of historical results see "Presentation." |
2 Constant currency growth is a non-GAAP financial measure that reflects growth for the period excluding the impact of foreign currency fluctuations. See "Non-GAAP Financial Measures" for additional information. |
3 Net income for the first quarter of 2019 included an additional depreciation and amortization expense of $16.7 million as a result of the Refinitiv Transaction and the resulting revaluation of our balance sheet in the fourth quarter of 2018. See "Presentation" for additional information. |
4 Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted EPS are non-GAAP financial measures. See "Non-GAAP Financial Measures" and the attached schedules for additional information and reconciliations of such non-GAAP financial measures. |
Discussion of Results
Rates – Revenues from rates of
Credit - Revenues from credit of
Equities – Revenues from equities of
Money Markets – Revenues from money markets of
Market Data – Revenues from market data of
Other – Revenues from other of
Mr. Olesky added, “In the first quarter, we continued to leverage our proprietary technology, client network and domain expertise to further digitize the markets. Specifically, trading activity in interest rate swaps and swaptions rose nearly 40%, U.S. high-grade credit captured record market share of TRACE, and mortgage volume grew 20%. Broad use of our trading protocols, across client sectors, asset classes and regions, is evidence of our ability to collaborate with an array of clients to enhance price discovery, access liquidity and complete trades more effectively.”
Operating Expenses – Operating expenses of
Other Matters
Assets as of
Initial Public Offering
On
Introducing Full-Year 2019 Guidance*
- Adjusted expenses of
$460 - $475 million - Assumed non-GAAP tax rate of 26.4%
- Capital expenditures and capitalization of software of
$42 - $48 million - Acquisition and Refinitiv Transaction related depreciation and amortization expense of
$98 million - Net interest income of approximately
$(0.4) million in the second quarter of 2019 and$0.5 - $1.0 million for the full year
* GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates as well as future changes and reversals outside of the normal course of business. Guidance assumes first quarter 2019 monthly average exchange rates for full year 2019.
Dividend
The Board of Directors of
Conference Call
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our guidance, including 2019 guidance, and future performance, the markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading “Risk Factors” in our prospectus filed with the
Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this release.
Presentation
This release presents historical results, for the periods presented, of
On
Non-GAAP Financial Measures
This release contains “non-GAAP financial measures,” including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Expenses. We make use of non-GAAP financial measures in evaluating our past results and future prospects. We present these non-GAAP financial measures because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Management and our board of directors use Adjusted EBITDA and Adjusted EBITDA margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA.
We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items. Each of the normal recurring adjustments and other adjustments included in Adjusted Net Income and Adjusted Diluted EPS help to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.
We use Adjusted Expenses as a supplemental metric to evaluate our underlying operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.
In addition, we present certain growth information on a “constant currency” basis. In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Certain discussions in this release isolate the impact of period-over-period foreign currency fluctuations to better measure the comparability of operating results between periods. Operating results excluding the impact of foreign currency fluctuations are calculated by translating the current period’s results using the prior period’s exchange rates.
See the attached schedules for reconciliations of the non-GAAP financial measures contained in this release to their most comparable GAAP financial measure. Non-GAAP financial measures have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income, net income per diluted share (“Diluted EPS”), operating income or operating expenses or any other operating performance measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment included in the reconciliations. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Diluted EPS and Adjusted Expenses, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, the non-GAAP financial measures contained in this release may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
Tradeweb Social Media
Investors and others should note that
About
TRADEWEB MARKETS LLC | ||||||||
INCOME STATEMENT (UNAUDITED) | ||||||||
Dollars in Thousands, Except Per Share Data | ||||||||
For the three months ended | ||||||||
Successor |
Predecessor |
|||||||
March 31, 2019 | March 31, 2018 | |||||||
Revenues | ||||||||
Transaction fees | $ | 102,640 | $ | 90,139 | ||||
Subscription fees | 34,445 | 36,326 | ||||||
Commissions | 34,197 | 27,883 | ||||||
Refinitiv market data fees | 13,616 | 12,237 | ||||||
Other | 1,894 | 2,918 | ||||||
Gross revenue | 186,792 | 169,503 | ||||||
Contingent consideration | - | (10,070 | ) | |||||
Net revenue | 186,792 | 159,433 | ||||||
Expenses | ||||||||
Employee compensation and benefits | 77,273 | 71,570 | ||||||
Depreciation and amortization | 33,503 | 16,268 | ||||||
Technology and communications | 10,040 | 8,463 | ||||||
General and administrative | 9,089 | 6,517 | ||||||
Professional fees | 6,971 | 5,538 | ||||||
Occupancy | 3,639 | 3,722 | ||||||
Total expenses | 140,515 | 112,078 | ||||||
Operating income | 46,277 | 47,355 | ||||||
Interest income | 858 | 471 | ||||||
Income before taxes | 47,135 | 47,826 | ||||||
Provision for income taxes1 | (4,738 | ) | (2,518 | ) | ||||
Net income | $ | 42,352 | $ | 45,308 | ||||
Net income per share | ||||||||
Basic | $ | 0.19 | $ | 0.21 | ||||
Diluted | $ | 0.19 | $ | 0.21 | ||||
Weighted average shares outstanding2 | ||||||||
Basic | 222,222,197 | 213,435,321 | ||||||
Diluted | 222,320,457 | 213,435,321 |
1 In a release issued May 9, 2019 by Tradeweb Markets Inc. (Nasdaq:TW) under the same headline, please note a typographical error for provision for income taxes for the successor period, March 31, 2019. The correct Provision for income taxes should be (4,783), not (4,738). 2 Net income per share and weighted average shares outstanding have been computed to give effect to the reorganization transactions that occurred in connection with the IPO, including the amendment and restatement of the fourth amended and restated limited liability company agreement of Tradeweb Markets LLC to, among other things, (i) provide for a new single class of common membership interests in Tradeweb Markets LLC (“LLC Interests”) and (ii) exchange all of the original members’ existing membership interests for LLC Interests. |
TRADEWEB MARKETS LLC | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) | |||||||||
Dollars in Thousands | |||||||||
For the three months ended | |||||||||
Reconciliation of Net Income to Adjusted EBITDA and Adjusted |
Successor |
Predecessor |
|||||||
EBITDA Margin | March 31, 2019 | March 31, 2018 | |||||||
Net income | $ | 42,352 | $ | 45,308 | |||||
Contingent consideration | - | 10,070 | |||||||
Interest income, net | (858 | ) | (471 | ) | |||||
Depreciation and amortization | 33,503 | 16,268 | |||||||
Provision for income taxes | 4,783 | 2,518 | |||||||
Unrealized foreign exchange (gains) / losses | (293 | ) | (968 | ) | |||||
(Gain) / loss from revaluation of foreign-denominated cash1 | 860 | (44 | ) | ||||||
Adjusted EBITDA | $ | 80,347 | $ | 72,681 | |||||
Adjusted EBITDA margin2 | 43.0 | % | 42.9 | % |
1 Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency. |
2 Adjusted EBITDA margin is defined as Adjusted EBITDA divided by gross revenue for the applicable period. |
For the three months ended | |||||||||
Reconciliation of Net Income to Adjusted Net Income and |
Successor |
Predecessor |
|||||||
Adjusted Diluted EPS | March 31, 2019 | March 31, 2018 | |||||||
Net income | $ | 42,352 | $ | 45,308 | |||||
Net income per diluted share | $ | 0.19 | $ | 0.21 | |||||
Provision for income taxes | 4,783 | 2,518 | |||||||
Contingent consideration | - | 10,070 | |||||||
Acquisition and Refinitiv Transaction related D&A1 | 23,209 | 6,506 | |||||||
Unrealized foreign exchange (gains) / losses | (293 | ) | (968 | ) | |||||
(Gain) / loss from revaluation of foreign-denominated cash2 | 860 | (44 | ) | ||||||
Adjusted Net Income before income taxes | 70,911 | 63,390 | |||||||
Adjusted income taxes3 | (18,721 | ) | (16,735 | ) | |||||
Adjusted Net Income | $ | 52,190 | $ | 46,655 | |||||
Share count (diluted) | 223,320,457 | 213,435,321 | |||||||
Adjusted Diluted EPS | $ | 0.23 | $ | 0.22 |
1 Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of pushdown accounting (where all assets were marked to fair value as to the closing date of the Refinitiv Transaction). |
2 Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency. |
3 Represents corporate income taxes at an assumed effective tax rate of 26.4% for the quarters ended March 31, 2019 and 2018 applied to Adjusted Net Income before income taxes. This adjustment assumes Tradeweb Markets LLC was subject to a corporate tax rate for the periods presented. |
For the three months ended | |||||||||
Successor |
Predecessor |
||||||||
Operating Expenses to Adjusted Expenses | March 31, 2019 | March 31, 2018 | |||||||
Operating Expenses | $ | 140,515 | $ | 112,078 | |||||
Acquisition and Refinitiv Transaction related D&A1 | (23,209 | ) | (6,506 | ) | |||||
Unrealized foreign exchange gains / (losses) |
293 | 968 | |||||||
Gain / (loss) from revaluation of foreign-denominated cash2 |
(860 | ) | 44 | ||||||
Adjusted Expenses | $ | 116,739 | $ | 106,584 |
1 Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of pushdown accounting (where all assets were marked to fair value as to the closing date of the Refinitiv Transaction). |
2 Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency. |
QUARTERLY TRADE VOLUME | ||||||||||||||||
1Q19 | 4Q18 | 1Q18 | QoQ | YoY | ||||||||||||
(in $ mm) | ADV | Volume | ADV | Volume | ADV | Volume | ADV | ADV | ||||||||
Rates | 431,380 |
26,453,386 |
380,294 | 23,523,246 | 344,740 | 21,142,985 | 13.4% | 25.1% | ||||||||
Credit | 16,383 | 1,009,820 | 12,034 | 752,384 | 14,999 | 926,776 | 36.1% | 9.2% | ||||||||
Equities | 7,702 | 475,731 | 8,544 | 542,944 | 9,977 | 612,528 | (9.9%) | (22.8%) | ||||||||
Money Markets | 191,123 | 11,771,688 | 188,938 | 11,689,227 | 164,517 | 10,071,040 | 1.2% | 16.2% | ||||||||
1Q19 | 4Q18 | 1Q18 | QoQ | YoY | ||||||||||||
ADV | Volume | ADV | Volume | ADV | Volume | ADV | ADV | |||||||||
Total | 646,587 |
39,710,625 |
589,810 | 36,507,801 | 534,232 | 32,753,329 | 9.6% | 21.0% | ||||||||
AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME | |||||||||||||
QoQ | YoY | ||||||||||||
1Q19 | 4Q18 | 1Q18 | % Change | % Change | |||||||||
Rates | $ | 2.02 | $ | 2.03 | $ | 2.13 | (1%) | (5%) | |||||
Credit | $ | 34.03 | $ | 42.50 | $ | 32.03 | (20%) | 6% | |||||
Equities | $ | 21.36 | $ | 20.17 | $ | 13.91 | 6% | 53% | |||||
Money Markets | $ | 0.49 | $ | 0.52 | $ | 0.47 | (4%) | 6% | |||||
Total FPM | $ | 2.62 | $ | 2.65 | $ | 2.69 | (2%) | (3%) | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005341/en/
Source:
Investors
Ashley Serrao, Tradeweb + 1 646 430 6027
Ashley.Serrao@Tradeweb.com
Media
Jonathan Mairs, Tradeweb +1 646 430 6176
Jonathan.Mairs@Tradeweb.com